Investing.com - The yen held early gains on Monday in Asia after core machinery orders jumped unexpectedly and producer prices lagged monthly, with investors also noting uncertainty on the U.S. interest rate outlook.
USD/JPY changed hands at 102.54, down 0.18%, while AUD/USD was down 0.01% at 0.7540.
Earlier, Japan reported core machinery orders jumped 4.9% month-on-month in July, a second straight monthly increase and well above the 3.5% fall seen, and showed a 5.2% gain year-on-year, compared with a 0.3% increase expected. The data highlight strong growth in a key segment of the economy.
"There was a widespread increase in orders from both the manufacturing and non-manufacturing sectors. A three-month average also showed a clear pickup in core orders in July," a Cabinet Office official said.
At the same time, PPI figures from Japan showed a 0.3% fall in August month-on-month, compared with a decline of 0.2% expected and a drop of 3.6% year-on-year, compared with a 3.5% decline seen. The weaker than expected producer prices signal continued stubborn inflation prospects.
In its quarterly Outlook Report issued in July, the BoJ said risks to its inflation projections are skewed to the downside as there is "considerable uncertainty" over global growth and longer-term inflation expectations in Japan.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, eased 0.10% to 95.23.
Several markets in Asia and elsewhere around the globe are shut on Monday to mark Eid al-Adha, including Singapore and Indonesia.
Investors will look to U.S. economic reports on retail sales and inflation for possible indications on the future direction of monetary policy and a policy decision by the Bank of England as well as data on German economic sentiment.
Last week, the dollar rebounded from almost two-week lows on Friday as comments by a Federal Reserve official boosted the chances for an interest rate increase in the near term.
The dollar recovered after Boston Fed President Eric Rosengren said that a reasonable case can be made” for hiking rates in order to avoid overheating the economy.
The dollar had weakened earlier in the week after a report on Tuesday showing that U.S. service sector activity slowed in August to its lowest level since early 2010.
The weak data, coming after last week’s lackluster U.S. jobs report dampened expectations for a rate increase at the Fed’s next meeting, which is scheduled for September 20-21.
The Fed raised interest rates for the first time in almost a decade in December. Expectations of higher interest rates typically boost the dollar by making it more attractive to yield seeking investors.
Investors currently price a 24% chance of a rate hike at the Fed's September meeting; according to federal funds futures tracked Investing.com's Fed Rate Monitor Tool.